NEW DELHI, Feb 18 (Reuters) - India's lower house passed a contentious proposal to split Andhra Pradesh and create the new state of Telangana on Tuesday amid chaotic scenes and uproar in parliament from opponents of the bill.

The state capital Hyderabad, where Google, Microsoft and Dell have major sites, will remain the common capital for the two states for a period of 10 years if the bill is passed in the upper house.

Lawmakers from Andhra Pradesh's prosperous coastal region have repeatedly protested in parliament over the division, with one legislator even firing pepper spray last week. The speaker adjourned the house three times after disruptions on Tuesday.

"This is a black day in the history of this country and we're declaring a bandh (shutdown) tomorrow in the state of Andhra Pradesh in protest," said Jagan Mohan Reddy, a lawmaker from coastal Andhra Pradesh.

The decision to break up the southern state was made ahead of elections due by May. Critics say the Congress party, which proposed the bill and leads a coalition government, is seeking to shore up its political fortunes after dragging its feet over an issue that has lasted four decades.

Supporters say Telangana's economic development has been neglected in favour of the richer and more powerful coastal region and that a new state is the only solution.

The main opposition Bharatiya Janata Party, which is the frontrunner in the national election race, voted in favor of the bill, allowing it to pass. It still needs approval in the upper house by Friday, when parliament's final session before the election ends.

Such was the mood on Tuesday that roads leading up to parliament in the heart of Delhi were blocked and paramilitary troopers deployed. In Telangana, supporters celebrated on the streets on hearing the news.

BLOCKING BILLS

Apart from the emotional reasons for opposing the division of Andhra Pradesh, Hyderabad was also a bone of contention as it fell in the proposed new state carved out of the western part. India's sixth largest city, it is also one of its most prosperous and a big generator of revenue.

A regional party that has been fighting for a separate state of Telangana would likely merge with Congress in the new entity. Congress may stand to benefit as it could gain parliamentary seats in Telangana in a show of gratitude for statehood.

"So we do hope to get majority of the seats in Telangana," said Digvijaya Singh, a senior Congress leader in charge of Andhra Pradesh, told Reuters.

The new state would account for 17 seats in parliament.

Congress's last-ditch efforts to pass a host of anti-graft bills before the government's term ends have been thwarted by protesting legislators, many from the party's own Andhra faction.

The finance minister's interim budget speech on Monday could barely be heard above the din of lawmakers angrily protesting against the creation of Telangana state.